An Assessment of 2017: Strategies, Developments and Future Goals

TL 1.1 billiontotal amount of 9 lease certificates

Ziraat Participation continued its operations with an understanding of seeing the confidence of its customers in them as the foundation of its success and left 2017 behind proud and excited to complete the year with a strong performance.

Offering products and services that are of high added value for its customers and fully compliant with the principles of participation banking, Ziraat Participation continued to support individual banking customers as well as the real sector throughout 2017, backed by the power of the Ziraat brand.

Ziraat Participation is constantly increasing the quality of its services and provides the best source of financing to its stakeholders with new products and services that will contribute to the development of participation banking.

Operating with the aim of being a leader and a respectable participation bank, not only in our country but also in our region, Ziraat Participation will provide an ever-greater contribution to the real sector and the country’s economy within the framework of Turkey’s 2023 targets.

Corporate and Entrepreneurial Banking

As a participation bank which provides world class services in compliance with participation banking principles, having strong ethical values and awareness of social responsibilities, Ziraat Participation corroborates participation banking in its region and continuously creates value.

Following the first profit-loss sharing project in 2016 which was performed in order to contribute to product variety in participation banking and open new development areas, Ziraat Participation took place in a second profit-loss sharing project in 2017. In 2018, profit-loss sharing projects in different industries will be our priority target.

In order to help customers, particularly SMEs, solutions were provided for them to have access to low cost financing, World Bank originated funds and Credit Guarantee Fund for those customers with guarantee issues.

In 2018 we will continue developing more solutions for those customers who need low cost financing and guarantee.

In 2017, within the scope of Turk Eximbank originated credits, disbursements were made in EUR and TL, in addition to USD, under the heading of Pre-shipment Export Credits. In 2018, our focus will be on increasing the number of customers who will benefit from these opportunities.

Ziraat Participation has issued 9 lease certificates with a total amount of TL 1.1 billion in 2017 and it will continue issuing new certificates to expedite the increase in the volume of participation banking in money and capital markets.

In 2017, Ziraat Participation continued to provide products and services with high added value and which are fully compliant with participation banking principles.

TL 1.3 million balance of loans to individual customers (as of 2017 year end)
82 number of contracted housing projects

Retail Banking

Aiming to meet customer expectations by providing the right products and services in a timely manner, Ziraat Participation achieved a successful performance in attracting individual customers in 2017.

Within the framework of participation banking principles, Ziraat Participation continues to support its customers and to meet their needs 7 days a week, 24 hours a day with the most appropriate solutions and through the most appropriate channels such as

Branches
ATM’s
Internet and Mobile Banking applications
Call Center

In 2017, the followings were realized in Retail Banking:

By the end of the year, the risk balance for individual loans exceeded TL 1.3 billion. In addition to that, the number of contracted housing projects rose to 82 and the Bank began to meet the financing needs of its customers from the related projects.
By the end of 2017, by completing the protocol processes of 36 different institutions, the Bank continued to increase the transactions made by the retired pensioners through the Bank and develop new services and transactions for them.
Starting with the second half of 2017, Ziraat Portfolio Short-term Lease Certificate Participation Fund which was founded by Ziraat Portfolio Management was offered to Bank’s customers.
The Bank started to organize Ziraat Participation Gold Days since June, a physical gold collection system, to collect gold savings in order to include them into the economy.
Activities to increase the usage of individual FILIKA card (Financing Limited Card) and Ziraat Participation Bank Card have expedited. Number of cards increased by 120% and the revenue from the card increased by 160%.

Within the scope of the “Correspondent Banking” project, anyone who wants to become a Ziraat Participation customer can open a Ziraat Participation account through any Ziraat Bank branch and apply for a Ziraat Participation Bank Card. Users of the Bank card are also able to inquire their balance and withdraw money from any Ziraat Bank ATM free of charge.

Retail Banking targets for 2018:

In 2018, Virtual POS product will be offered to member businesses. Ziraat Participation will continue to make contracts with manufacturers of POS/cash registers of which POS system will be integrated.
Development and diversification of fund collection products will be accelerated.

Channel Management
Adopting the multi-channel strategy, Ziraat Participation offers its customers effective and high-quality services through branches as well as through electronic service channels. The results achieved in this area in 2017 are listed below.

ATMs

As of the end of 2017, the number of active Ziraat Participation ATMs increased by 34% when compared to the previous year, with transaction volume amounting to TL 369 million.
The process of depositing money into accounts can be conducted in Turkish, English, German, Arabic and Russian from all ATMs.
The card copying security application is used in all ATMs to ensure that customers are not exposed to ATM fraud.
In order to increase the customer service standard, tracking of ATM malfunctions and supply status became automatic and information is being sent to those in charge of ATMs and institutions both electronically and over mobile platform.

The Bank aims to offer a better service from ATMs in 2018 following customer experience analysis, with improvements in customer service by informing those managing the ATMs, closer liaising with organizations in electronic and mobile media through the automatic breakdown and maintenance status follow up service and an increasing the number of ATMs.

164 thousand calls number of calls answered by the Customer Communication Center
>100% increase in number of Internet Banking users and transactions performed through Internet Banking

Customer Communication Centre and Central Banking Branch

In 2017, a total of 164 thousand customer calls were received and 547 thousand informative SMS and 265 thousand informative e-mails were sent from the Customer Communication Center.
The Interactive Voice Response system (IVR) was put into practice with English and Arabic language options.
Central Banking Branch which was opened to serve customers who opened their accounts through internet branch or correspondent banks continues its operations.
The Solution Support Center, which serves the customers of the Central Banking Branch, started its operations. Solution Support Center has answered 33,698 customer calls in 2017.
Customer Communication Center and Solution Support Center customer representatives were trained by different departments in the organization.
Quality monitoring services were received and they will continue to be received in 2018.

Internet Banking

Ziraat Participation’s Internet Banking transaction functions were expanded so that customers can perform all their banking transactions from the branchless channel.
Number of Internet Banking customers and transaction amount has increased by more than 100%.
The opportunity to switch from individual internet banking to the E-Government Gateway, which provides access to the services offered by the public institutions and organizations in electronic media from a single point, was provided without the need for an e-government password.
Studies are being conducted to enable customers to make their payments through their accounts by direct payment management.

Ziraat Participation aims to make its customers’ lives easier by ensuring the integration of its products and services with non-branch digital channels and by spreading the use of non-branch channels, mainly the mobile channel.

In 2018, the Internet Banking channel is planned to be redesigned to enhance the Internet Banking experience for customers, to offer a flawless and easy service and to meet different customer needs.

Mobile Banking

The Ziraat Participation Mobile Banking application was made available for iOS operating system users with the “Participation Mobile” brand on 17 December 2016, with the aim of helping customers with its innovative and customer oriented digital strategy. The application had been downloaded by 150 thousand customers by the end of 2017.
Participation Mobile’s transaction variety has been improved. Many banking transactions such as account transactions, money transfers, invoice and tax payments, foreign currency/gold transactions, donation transactions can be performed through Participation Mobile.
In 2018, the Participation Mobile application will offered to customers using the Android operating system and users will be able to logon to the application with Mobile Approval, which will be enabled with new function developments.

Ziraat Participation has successfully completed a USD 236 million murabaha syndication in cooperation with international banks

1.59 days average solution time of complaints
ISO 10002:2014 Customer Satisfaction Management System quality certificate was received.

Customer Satisfaction
In 2017, a total of 668 of the total of 4,226 incidences of feedback that were resolved in the Ziraat Participation Customer Satisfaction Unit were customer complaints.

The average resolution time for items of feedback was 1.07 days during the year and the average resolution time for complaints stood at 1.59 days.

In the sector, where the average response time is between 5-7 working days, Ziraat Participation was positioned among the fastest banks in this field.

In 2017, Ziraat Participation was awarded the ISO 10002: 2014 Customer Satisfaction Management System quality certificate, an indicator that customer feedback is being responded to well and also of continuous improvement in accordance with international standards.

Adopting a customer-focused service approach and working on continuously to increase customer satisfaction, Ziraat Participation organizes workshops to provide permanent solutions to common customer complaints. In addition to that, progress has been made in Complaint Line Project infrastructure process and presentation activities.

Treasury Management and International Banking
Ziraat Participation’s assets have almost doubled in 2017 and a growth strategy based on financing mainly real sector and foreign trade has been followed.

Ziraat Participation went on resource diversification in asset-liability management with main resource being participation funds and it established the liability base of the balance sheet taking into consideration optimum cost and term. The Bank adopted a strategy to effectively manage the pools of participation funds. In this context, it expanded its resource opportunities form local and international banks in TL and foreign currency.

Ziraat Participation effectively used interbank borrowing and financing products to fulfill the required reserve liability, to meet the liquidity needs in line with the participation banking principles and to assess the surplus.

Correspondent Relations
In 2017 Ziraat Participation established a swift correspondent relationship with a significant number of banks by completing the legislative compliance processes and quickly met the requests in the foreign trade field.

Opening two USD correspondent accounts in 2017, Ziraat Participation signed a mutual Wakala / Murabaha contract with several banks. Within the framework of these contracts, foreign resources aimed at increasing the diversity of the resources with interbank Murabaha and Wakala transactions were provided.

In 2017, Ziraat Participation also successfully completed a USD 236 million Murabaha syndication performed with the participation of international banks.

Ziraat Participation, which plays an active role in capital markets as a part of its strategy of enriching the resource structure, obtained issuance approval with a TL 1.5 billion ceiling from the Capital Markets Board in order to issue TL denominated lease certificates in the local market with its affiliate, Ziraat Katılım Varlık Kiralama. Within this framework, issuances were made in different amounts with a total of TL 1.1 billion.

In 2017, Ziraat Participation continued to provide long term resources from the World Bank and various other development banks, for financing SMEs and foreign trade financing and to maintain its financing support for SMEs and the real sector.
Ziraat Participation aims the following in 2018:

Significantly increase the number of correspondent banks and the level of foreign trade volume,
Perform a sukuk issuance in foreign currency in order to ensure borrowing diversification outside participation funds and to extend maturity structures on the resource side,
Continue to issue lease certificates in the domestic markets,
Add depth to the capital markets by carrying out corporate lease certificate issuances in favor of third parties other than Ziraat Participation, through the newly established asset leasing company,
Provide increasing support to the real sector by maintaining a supply of resources from international institutions for the financing of SMEs and foreign trade.

Customs tax collection services have started.
TFRS 9 infrastructure for transition has been completed.

Operational Transactions

In 2017, Ziraat Participation implemented an array of operational measures to facilitate and accelerate the process of the participation banking product and service offering.

Efforts to make the clearing of cheques in USD and EUR possible have been completed and Foreign Currency Cheque Clearing Protocol has been signed with T.C. Ziraat Bankası, Türkiye Finans Katılım Bankası, Türkiye Halk Bankası and Albaraka Türk Katılım Bankası.
Certification tests for payment of SRRNET/Avea invoices through Ziraat Participation have been completed and collections have started.
Certification tests for collection of Bepsaş, Çinigaz Kütahya, Çorum Su, Çorum Gaz, Sürmeligaz, Kargaz, Dicle Epsaş, Diski, Kayseri Su, Malatya Su Yetaş, Enerya Konya, Sakarya Su, Kütahya Su invoices have been completed and collections have started.
Umrah collections have started to be collected in SAR currency.
Certification tests for customs tax collections have been completed and collections have started.
On the job trainings have continued to be conducted for employees who works or would start to work in Ziraat Participation Headquarters or branches. Visits to branches before branch openings, audits of branches to confirm their readiness to provide services and to make up for the deficiencies have been conducted.
Work flows have been reviewed and individual customers’ account opening process was adjusted so that once an account opening starts in the branch it is approved and completed at the branch. This has shortened the time of the transaction which contributed to customer satisfaction.

Information Technologies

With its information technology activities, Ziraat Participation aims to provide speed, innovation and change management required at this age and to meet its customers’ needs in a simple way by adopting innovative projects which integrate effectiveness and efficiency to its infrastructure.

Various Information Technology projects have been successfully completed and put into use in 2017.

Infrastructural works for transition to TFRS 9 have been completed.
Integration to Turkey’s national payment system TROY has been completed.
Mobile Banking application has been put in service for both corporate and joint account customers and new functions have been put in use under the 2nd phase.
Branch and Portfolio Performance Scorecard project has been completed and starting from 2018 targets and performances of all branches will be measured and analyzed with the newly identified metrics.
Customer and Product Activity Criteria and Reporting infrastructure has been developed. This module will be available at the beginning of 2018.
Legal notification compliance activities have been completed for GİB/MASAK notifications and put in use.
Investment transactions (fund purchases and sales) can now be realized through e-branch.
Investment fund purchase and sale transactions can be done from both branches and over the internet.
Activities for KKB (Credit Bureau) Web Service Infrastructure have been performed.
Automation for Eximbank processes has been completed.
Early Warning Project has been improved to include more advanced criteria and methods of monitoring.
Establishment of Nostro Confirmation Application and its integration with banking system were completed.
Structural arrangements needed for handicapped customers to make transactions through the ATM’s have been completed and they will be put in use at the beginning of 2018.

Cyber threatprevention services have been purchased.

Having completed many projects in Information Technologies area, Ziraat Participation completed its infrastructure works for the transition to TFRS 9 application.

Activities under Information Technologies area which will be performed in 2018 are summarized below:

Shared ATM Cash Deposit and Cross Transactions will be put in use.
Virtual POS product will be in service at the beginning of 2018.
Cash transfer from card to card (Moneysend) will be in service at the beginning of 2018.
FILIKA card product will be offered to customers through the correspondent bank starting from the beginning of 2018.
Security infrastructure works which will provide for single use password without the need for SMS password in Mobile Banking applications are in progress.
Studies for Direct Payment from the Account capability on Participation Mobile and e-Trade transactions have started.
Cards which are linked to TROY payment system will be able to make contactless payment in 2018.
Activities to enable Ziraat Participation cards to be open to e-trade with 3D Secure integration have started.
Ziraat Participation had significant achievements as a result of their efforts in information security area in 2017.
Ziraat Participation has completed the purchase of cyber threat prevention services. Within the framework of these services, the Bank expects to prevent average incidents and threats against brand security/reputation, trojan and identity theft incidents, mobile application and mobile market frauds, fake mobile applications and fraud incidents linked to those.
Activities have started to use HTTPS feature to enable the main banking system to provide more secure services.
The Bank started to work on setting up systems for controls and arrangements necessary for SWIFT CSP (Customer Security Program).
Central log management system has been installed. It started to take logs from the system and make correlations to set up alarm mechanisms. All systems have been scanned against current attacks and instant alarm mechanisms were set up.
Central security application called Vulnerability Scanning System was put into service to ensure prevention, detection and removal of malware.

Ziraat Participation has recorded significant progress in technology and infrastructure activities.

Transfer of Ziraat Participation Data Center in Ankara Söğütözü to the TIER-3 standard modern Data Center in Istanbul Esenyurt has been completed.
Monitoring infrastructure has been installed to monitor the continuity of network devices on a 7/24 basis.
Installation of the new data center to be used as a secondary and ODM data center has been completed in Ankara.
Disaster Center Business Unit tests which need to be performed at least once a year have been completed.
Emergency Business Continuity tests have been completed.
Pilot studies for Virtual Desktop project have started.
Application implementation studies have started to enable monitoring of virtual systems and analyzing the trends.